Friday, 22 September 2017

A Renaissance of the Brexit talks? Theresa May’s Florence speech

Professor
Steve Peers*

Today’s speech
by Prime Minister Theresa May was widely understood to be an attempt to unblock
the talks on the Brexit process, which have clearly become stalled, in
particular over financial issues. Will her speech accomplish that aim? Or will
its implicit attempt to reassure Leave voters in the UK, especially in the cabinet
and the press, mean that it fails to unblock talks? And what does it tell us about
the future of UK/EU relations?

The key
feature of the talks is that they are sequenced. In an initial phase of talks,
the main issues are: a) the position of EU27 citizens in the UK, and UK
citizens in the EU27, after Brexit (discussed here);
b) the extent of outstanding UK commitments to the EU; and c) the issue of the
border between Ireland and Northern Ireland (discussed here).
Only if the EU judges there to be ‘sufficient progress’ on these issues will
the talks move to a second phase, about the future trade relationship between the
EU and the UK and a transitional arrangement to bridge the gap between Brexit Day
and that future arrangement.

As things
stand, the EU will not judge there to be ‘sufficient progress’ in October, mainly
because the UK has not accepted any specific financial commitments, although
there has also been little progress in discussion of the Irish border and there
are still gaps between the two sides’ positions on UK and EU27 citizens.

In that light,
has May’s speech moved the UK closer to reaching the ‘sufficient progress’
threshold? On Northern Ireland, she
simply observed that both sides wanted to avoid a ‘hard border’, but said
nothing new about that. The UK’s proposals on novel customs methods to address
the issue (by the government’s own admission) ‘blue sky thinking’, but she did
not further flesh them out.

On the issue
of EU27 citizens, she committed to
setting out the withdrawal agreement into UK domestic law, and permitting the
UK courts to take account of relevant ECJ case law. But this goes no further
than the draft EU
Withdrawal Bill, which already assumes (in Clause 9) that the withdrawal
agreement will be transposed in domestic law and sets out (in Clause 6) that pre-Brexit
ECJ case law binds lower courts (but not the UK Supreme Court, the government
or Parliament) and that post-Brexit ECJ may be considered at a UK court’s
discretion. While the Prime Minister made much of the excellence and
independence of UK courts, she failed to mention the embarrassing recent refusal
of the Home Secretary to give
effect to a court order. So the EU27 side will still press for the ECJ’s
involvement. Nor did she make any concessions as regards the substance of the
law.

On financial issues the Prime Minister
said in effect that the UK would pay into EU funds to the end of the current EU
budget cycle in 2020, during a transitional period after Brexit Day in March
2019 (see below). She also stated that the UK would honour commitments made
during EU membership, although it is not clear if this is a reference to the
broader issue of the UK’s share of costs in cases where the EU made a
commitment in one year and paid for it in a later year. There are also other
financial issues (off-budget funds, pensions, UK share of liability for loans
that might not be paid).

More broadly, the
Prime Minister supported the idea of a transitional
period after Brexit Day of about two years, when the UK and EU would still
trade on the same basis and apply the same security arrangements. The UK would
still cease to be a formal EU Member State on Brexit Day – ceasing to participate
in the EU’s political institutions – although some role for the ECJ seemed to
be implicitly conceded. It should be noted that the EU27 side is also open to
discussing a short transitional period as long as EU frameworks of enforcement,
et al (including the ECJ) continue to apply. So there is broad agreement on the
notion of a transitional period – subject to discussion of the details.

What about
those details? Mrs May offered little about the substance, stating that EU27
citizens could still come to the UK during the transitional period but would
have to register – as already permitted by the EU
citizens’ Directive (see Article 8). Presumably the UK would have a customs
union with the EU for the transitional period, although she said it would start
to negotiate trade deals with non-EU countries. The transitional period could be
terminated early on specific issues, for instance dispute settlement – an indication
that the UK wants to end involvement with the ECJ as soon as possible.

Comments

Despite the
attention paid to Mrs. May’s speech, the key question is whether the details of
the UK’s negotiation position have changed. In particular, movement on those financial
issues which were not expressly mentioned will be crucial determining whether
talks move forward to trade issues in October. But the issue on enforcement of
EU27 citizens’ rights will still remain a stumbling block, and the EU side will
likely want to see some clarification of the UK’s proposals on customs and the Irish
border.

The tone of
the Prime Minister’s speech may help. It was civil, emphasising the importance
of a future partnership between the UK and the EU, ruling out a rush to lower
UK regulatory standards and with only brief mention of the discredited "no
deal is better than a bad deal" mantra.

If the talks
do move forward to transitional issues, this means there is no immediate need
to discuss the technical questions of winding down UK/EU relations as of Brexit
day, although they would still have to be discussed at some point if the UK and
EU are going to change the substance of their relationship after that date. But
this will mean that difficult issues of principle relating to the transitional
period will have to be discussed.

What exactly is
the transition period a bridge to? Which EU laws (if any) will no longer be
applied? What if the transition time frame isn’t long enough? Would the UK be bound
by new ECJ rulings during this period? Would it apply new EU legislation? Would
the UK be consulted on it if it does? Would EU law apply in the same way as it
does as an EU member? While the Prime Minister was anxious to rule out the ‘Norway
model’ of EU/UK relations, the transitional period would nevertheless look
somewhat like that model – except it appears that the UK would apply even more
EU law than Norway does.

Overall, the
Florence speech makes it somewhat more likely – but still far from certain –
that there will be a conclusion to the Brexit talks, with no immediate ‘cliff
edge’ for either side on Brexit Day. As always, the devil will be in the
detail.

Barnard &
Peers: chapter 27

Photo credit: The
Telegraph

* *This blog post was supported by an ESRC Priority Brexit
Grant on 'Brexit and UK and EU Immigration Policy'

2 comments:

Fundamentally to the rest of the world the EU is a RTA and a Customs Union as defined by GATT. GATT's article XXIV(5) is pretty clear that any interim deal needs to be more permissive than current status quo. That will not be the case for any EU/UK deal

Or does XXIV(3) resolve all of this.GATT is designed to have a ratcheting effect towards more liberal trade.

But the EU is a WTO *member* with its own legal personality. If a transition or later FTA between UK and EU violates the WTO with the result that it's not legally permitted then trade is even *less* liberal.